-Factors contributing to Globalisation

The rise of information and communications technology

 The move from telephonic communication to cable and satellite digital communication have
resulted in increasing information flows

 Time-space compression – people in faraway places feel closer together as they can
communicate instantaneously.

 Individuals and families are more directly plugged into news from the outside world – some
of the most gripping events of the past decade have unfolded in real time in front of a global
audience.

 Some individuals identify being more ‘cosmopolitanism’ as a result and increasingly identify
with a global audience; others perceive increasing globalisation as a threat to their ways of
life and retreat into Fundamentalism and/ or Nationalism as a defensive response.

Economic factors

 The global economy is Post Industrial – as a result it is increasingly ‘weightless’ (Quah 1999)

– products are much more likely to be information based/ electronic, such as computer
software, films and music or information services rather than actual tangible, physical goods
such as food, clothing or cars.

 The role of Transnational Corporations (TNCs) is particularly important. These are

companies that produce goods in more than one country, and they are oriented to global
markets and global products.

 Global Commodity chains – manufacturing is increasingly globalised as there are more

worldwide networks extending from the raw material to the final consumer. The least
profitable aspects of production – actually making physical products, tend to be done in
poorer, peripheral countries, whereas the more profitable aspects, related to branding and
marketing, tend to be done in the richer, developed, core countries.

 Production is much more flexible than in the past – companies are much more likely to hire
people on short term contracts and move around the globe seeking cheaper labour costs, as
a response to increased global economic competition.

 The electronic economy underpins globalisation – Banks, corporations, fund managers and

individuals are able to shift huge funds across boarders instantaneously at the click of a
mouse. Transfers of vast amounts of capital can trigger economic crises.

Political changes

 The collapse of Communism in the 1990s meant the end of the divided ‘cold war’ world, and
now these ex-communist countries are themselves democracies and integrated into the
global economy.

 The growth of international and regional mechanisms of government such as the United

Nations and European Union – governments of Nation States are increasingly restricted by
international directives and laws stemming from these international bodies.
  International Non-Governmental organisations such as OXFAM or Greenpeace, operate in
dozens of countries, and members tend to have an international outlook.

****The above account of factors contributing to globalisation is taken from Giddens’ Sociology,
edition 6, 2009

Additional notes on Factors in globalisation

Factors are the fuel of globalisation and the reason why we have this process in its modern form.

Development of technologies. 

Science and technology are the key factors on the acceleration of globalisation. These two have
shrunk the world in time and therefore costs, also have facilitated the communication between
nations in so many ways. Today anyone can buy something online and have it the same day. 

Science and Technology are involved in almost everything we know and use, and your smartphone is
a proof of it. With it, you can connect to people, buy anything from anywhere, communicate to
anyone, have access to information and news, find transport, read books, listen to music, watch
videos uploaded by people in different parts of the world, you can also check the weather and even
check the stocks. That’s globalisation and a clear evidence of the power of technology.

Financial

The financial system is a scheme to facilitate the flow of financial capital for enterprises and nations.
The purpose of it is the investment and the facilitation in transactions (imports and exports of goods
and services, transfer of wealth and purchase or sale of assets) with the help of banks and financial
institutions. In short, financial system will seek the right methods for a good management of capital.
There are pros and cons concerning this financial integration because of its fragility, if something
goes wrong, all the involved will be affected just as it happened with Greece in 2009 spreading to
other European countries like Portugal and Spain.

Security. 

In globalisation, it is crucial to have stability, whether is social, political or economic, to avoid conflict
and crisis; If one of the processes comes down, the others will follow since are strongly
interconnected and interdependent to one another. When it comes to trade, nations and companies
look for economic security, for is a factor to create and have good international relations and
because a lot of information is at a stake. 

Communications. 

The modern communication has made the instant contact a reality no matter where you are.
Communication in globalisation goes beyond social media. Global communication helps global
organisations or corporations to thrive, as long as they have a good strategy. If a company wants to
expand to another country it will be imperative to know about the culture to avoid gaps between
the stakeholders.

Trade agreements. 

The promotion of free trade has had an influence in the political decisions of nations to reach
agreements that will benefit the involved. The trade agreements open borders eliminating quotas
and trade restrictions. In this case, the International Monetary Fund (IMF) serves as a moderator
having the right to report anomalies and violations of the agreements. 
The European Union and NAFTA are the most famous trade agreements. The first one has an
internal market to assurance the so called ‘four freedoms’ which are goods, services, labour and
capital through a system of laws. The second one is the North America Free Trade Agreement,
signed by the US, Canada and Mexico and it consisted in the elimination of tariffs in exports. The
actual renegotiation is set to change the name to USMCA United States-Mexico-Canada Agreement. 

To sums this up, globalisation is what it is because of technology. All of this, is controlled and ruled
by governments, organisations and businesses for the purpose of trade, investments and the
creation profits.

So, what is globalisation? It would be great if you make your own definition of what you understood.
Here is an example by the Royal Geographical Society, so you can compare it with yours:

‘Globalisation is the increasing connections between places and people across the planet, established
through trade, politics and cultural exchanges, and helped by technology and transport’.

Factors Responsible for the Acceleration of Globalisation

Some of the key factors that have driven the process of globalisation are summarised below.

Transport systems

In the 1800s, steam ships and trains were moving goods and people in large numbers along global
trade routes spanning Asia and Africa. By the late 1960s, the arrival of the intercontinental Boeing
747 (Jumbo Jet) had made international air travel less expensive, resulting in increased global flows
of tourists. In recent decades, food and merchandise have been transported efficiently across
enormous distances using intermodal containers in developments in containerisation. The enormous
Chinese shipping vessels of COSCO (Chinese Ocean Shipping Company) can transport 13,000
containers globally per shipment.

Information and communications technologies and systems

The internet originally began life as part of a scheme funded by the US Defence Department during
the Cold War in the 1960s. Early computer networks were designed to link together important
research machines in different locations. Since then, connectivity between people and place has
rocketed. Now, five billion Facebook 'likes' are registered globally every day. Broadband internet has
helped deliver this connectivity. Gigantic amounts of data flow across the Earth’s ocean floors
through fibre-optic cables owned by national governments or internet TNCs such as Google.

Together, these changes are responsible for the shrinking world effect.  Thanks to technology,
distant places feel closer together than ever before and take less time to reach when travelling. This
phenomenon is also termed time-space convergence. 

Other Factors

Trade agreements and trade blocs

For many decades, three international organisations have acted as ‘brokers’ of globalisation through
the promotion of free trade policies. The International Money Fund (IMF), World Bank and World
Trade Organisation (WTO) have collectively worked towards a ‘free trade consensus’. The ‘Bretton
Woods institutions’ (as they are also known) have persuaded many developing countries to embrace
free market economics and globalisation and adopt a ‘western model’ of trade.  

National governments have also promoted the growth of trade blocs. To trade freely with
neighbours or more distant allies, trade agreements have been drawn up allowing state boundaries
to be crossed freely by flows of goods and money. Mexico and the USA are both part of NAFTA
(North America Free Trade Association). The EU has evolved over time from being a simple trade
bloc into a multi-governmental organisation with its own currency (the Euro) and some shared
political legislation. 

Security relationships

The ‘Bretton Woods institutions’ were established after WW II in the hope they would make the
world more politically secure by stabilising the world economy, and avoid replicating the shocks of
the 1920-30s. 

The United Nations, the EU and NATO also have roots in the post-war era when governments sought
to promote world security and lessen chances of future conflict through greater co-operation of
similar economies.

Management systems

Large corporations ranging from Lidl to Samsung have built complicated global production networks
(GPNs) as part of their global businesses. These consist of extensive outsourcing and business
partnership arrangements. Food giant Kraft has 30,000 suppliers providing the ingredients it needs.
A TNC manages its GPN in the same way the captain of a team manages the assemblage of players -
each with a key role. 

Over time, more national governments have begun to manage their economies in ways which are
compatible with globalisation and allow them to integrate better with global systems. In 1978, Deng
Xiaoping – the new Chinese leader after Mao - began the radical ‘Open Door’ reforms which allowed
China to embrace globalisation while remaining under non-democratic rule. Globalisation began in
1991 for India, when its democratic government introduced sweeping financial reforms.

Financial systems

During the 1980s, financial systems worldwide began to be transformed in line with policies
favoured by US President Ronald Reagan and Margaret Thatcher’s UK government. They believed
that government intervention in markets impedes economic development. Restrictions were
therefore lifted on the way companies and banks operated. The deregulation of the City of London in
1986 removed large amounts of ‘red tape’ and paved the way for London to become the world’s
leading global hub for financial services. 

Over time, a global financial system has developed whereby the International Monetary Fund (IMF)
channels large loans from rich nations to countries that apply for assistance. In return, the recipients
must agree to run free market economies that are open to outside investment. As a result, TNCs are
able to enter these countries to establish more easily.